EVA and the Impact of the Macroeconomic Variables: Evidence from the Jordanian Manufacturing Companies

Abstract

This study aimed at examining the effect of macroeconomic variables on the performance of Jordanian manufacturing companies listed in Amman Stock Exchange expressed by EVA using unbalanced panel data pooled ordinary least square (OLS) regression model of all 77th Jordanian manufacturing companies listed at ASE for the period 2000-2014 resulting in 1085 firm-year observations connecting firm level and time series data set. This study has revealed that interest rate has statistically significant inverse effect on the performance of the Jordanian manufacturing companies (β=-0.064, p-value <0.01).The results of this study have also revealed that Inflation (β=0.0945, p-value <0.05) and Government expenditure ratio(β=0.0734, p-value <0.05) have a statistically significant positive effect on the performance of the Jordanian manufacturing companies at the significance level <0.05.Also, Gross domestic product(β=0.00395, p-value <0.10) affects the performance of the Jordanian manufacturing companies at the significance level< 0.10, and finally, the study has revealed that Money supply and the labor force indicator have no statistically significant effect on the performance of the Jordanian manufacturing companies. Basically, and depending on the results of this study, we can conclude that Economic Value Add (EVA) of the Jordanian manufacturing companies, as a proxy of the performance, is a function of Inflation, Interest rate, Government expenditure ratio and Gross domestic product.